Blogging from the Highlands of Scotland until I return to the Murcia region of Spain
in the Autumn for a month or so

'Fair and softly goes far' - Miguel de Cervantes

Tuesday, 31 March 2009

Unicaja calls off merger talk with Caja Castilla La Mancha

Some of the background to the 'rescue' over the weekend of troubled savings bank Caja Castilla la Mancha (CCM) by the Spanish government (I wrote about that here) is now beginning to emerge.

It seems thar the Andalusian savings bank, Unicaja, had been in merger talks for some time with CCM, but had pulled out because it was dissatisfied with the guarantees offered by the Banco de España. One is left with the impression that this decision 'forced the hand' of the Spanish government to rescue CCM itself.

According to the linked report, the president of Castilla-La Mancha, José María Barreda, had complained that the Unicaja demands were "excessive" and made the merger "unworkable". In breaking its silence, Unicaja contends that its requests were reasonable and the merger on the terms offered "no cuadraban los análisis que habíamos hecho con lo que estaba dispuesto a darnos el Banco de España" (rough translation - did not fit in with our analysis of the adequacy of the guarantees offered by the Bank of Spain), and 'twisting the knife' advisers to Unicaja added that the CCM: "estaba mal y sus cuentas no cuadraban con la realidad" (rough translation - was wrong and their accounts did not fit with reality).

Time will tell whether the claim by the Spanish government that CCM is merely "illiquid" rather than "insolvent" will have any real importance in the eventual outcome of the Spanish recession, when the Spanish economy has been so heavily-dependent on its property market and now has a massive over-stock of unsold and over-valued property built during the boom years, largely on a wave of speculation. Of course I am not an entirely disinterested by-stander in this ongoing disaster!

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